Hoenig v. Texas Commerce Bank, N.A.

939 S.W.2d 656, 1996 WL 411217
CourtCourt of Appeals of Texas
DecidedAugust 20, 1996
Docket04-95-00407-CV
StatusPublished
Cited by14 cases

This text of 939 S.W.2d 656 (Hoenig v. Texas Commerce Bank, N.A.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hoenig v. Texas Commerce Bank, N.A., 939 S.W.2d 656, 1996 WL 411217 (Tex. Ct. App. 1996).

Opinion

OPINION

GREEN, Justice.

Union National Bank (“UNB”), as original trustee of the Mamie Garcia Trust (“Trust”), and Ernest Hoenig, former lessee of Trust property, appeal a judgment in favor of Texas Commerce Bank, N.A. 1 (“Trustee”), current trustee of the Mamie Garcia Trust. The trial court held that Hoenig wrongfully converted funds due the Trust and that UNB was “culpably negligent” in failing to discover and/or prevent the conversion of funds. We affirm.

In 1976, Hoenig rented a certain piece of downtown Laredo property at the corner of Iturbide and Salmas streets from Mamie Garcia. The lease provided a 5-year primary term and two five-year renewal terms. During 1977, Hoenig added improvements to the property, subletting the three existing retail stores which fronted on Iturbide Street (the Iturbide property) plus the three added rental spaces which faced Salinas Street (the Salinas property). In 1978, Garcia died; under the terms of her will, UNB was named trustee for a trust which encompassed various properties, including the property being leased by Hoenig at the intersection of Itur-bide and Salinas streets. Hoenig exercised both of the option periods provided in the original lease.

In 1991, Trustee approached UNB soliciting trust management business. The parties agreed that Trustee would assume management of various trust portfolios, including the Mamie Garcia Trust. Trustee made inspections of the trust property before and after assuming responsibility for the Trust based on information provided to it by UNB. During the management of the Garcia Trust, *659 UNB was unaware that the Salmas property-belonged to the Trust. Consequently, UNB did not inform Trustee about the existence of the Salinas stores. Trustee discovered that the Salinas stores belonged to the Trust several months after assuming its duties.

As the end of the second renewal period approached in 1991, Hoenig sought to negotiate a new lease with the UNB trust department. The bank declined, and notified Hoe-nig that the lease would expire according to its terms at the end of May 1991. UNB notified the Iturbide tenants to pay future rentals to the bank, but being unaware of the existence of the Salinas stores UNB failed to inform those tenants. The Iturbide tenants paid the bank as directed, but Hoenig continued to collect rent from the Salinas tenants.

The court signed an order replacing UNB with Texas Commerce Bank as trustee on December 31, 1991. Because of several missteps in transferring the trust portfolio, UNB continued to collect the Iturbide rents for the first three months of 1992. Texas Commerce Bank finally assumed its trustee duties in April 1992. Trustee first visited the property as trustee in June 1992 and discovered the Salmas stores in September. After ascertaining the status of the property, Trustee took action to prevent Hoenig from continuing to collect rent from the Salmas tenants. Hoenig collected rent from the Salinas tenant from May 31, 1991 when his lease expired until October 31, 1992 when Trustee forced him to stop doing so. Trustee sued Hoenig and UNB for recovery of the loss to the trust of the rentals collected from the Salmas properties after Koenig’s lease expired.

UNB’s first two points of error complain that the trial court used an incorrect definition for culpable negligence, and erred in entering judgment against it because it was not culpably negligent. The term “culpable negligence” finds its way into this case from Mamie Garcia’s testamentary trust documents, which purport to absolve the appointed trustee of any loss to the trust estate, “save culpable negligence or intentional misdeed.”

The trial court defined “culpable negligence” as the “failure to use ordinary care, such as a prudent trustee, similarly situated, would have used in the same or similar circumstances” — an ordinary negligence definition. UNB argues, however, that by use of the modifier “culpable” in conjunction with the term “negligence” in her testamentary trust instrument, Mamie Garcia intended that more than the mere failure to use ordinary care was required to expose her trustee to liability for its acts. UNB says, then, that culpable negligence must mean the same thing as gross negligence and the trial court should therefore have used the more difficult-to-prove gross negligence definition.

In support of its argument that a duty of care higher than ordinary care was intended, UNB cites James T. Taylor & Son, Inc. v. Arlington Indep. Sch. Dist., 160 Tex. 617, 335 S.W.2d 371 (1960). There, the court stated that if Taylor’s actions were negligent, equity was available, but that if his conduct was culpably negligent, equity was not available. UNB argues that the court, without saying so directly, treated the terms differently, with culpable negligence being more blameworthy. But it should be noted that the court in Taylor did not, either directly or indirectly, purport to equate gross negligence with culpable negligence.

UNB also points to a number of decisions in other jurisdictions which hold that culpable negligence represents a higher duty of care than ordinary negligence. Ingram v. Pettit, 340 So.2d 922 (Fla.1976); Hurter v. Larrabee, 224 Mass. 218, 112 N.E. 613 (1916); Warren v. New York Tel. Co., 70 Misc.2d 794, 335 N.Y.S.2d 25 (1972); Bettencourt v. Pride Well Serv., Inc., 735 P.2d 722 (Wyo.1987); Thomas v. Milfelt, 222 S.W.2d 359 (Mo.App.1949); State v. Davis, 66 N.C.App. 334, 311 S.E.2d 311 (1984). Those jurisdictions appear to define “culpable negligence” to mean the rough equivalent of what we recognize in Texas as gross negligence. 2

*660 Texas, however, has maintained a traditional attitude toward the meaning of negligence and gross negligence. And we are aware of no other terminology utilized in this State to describe what is otherwise familiar to lawyers as either ordinary negligence or gross negligence. Yet, UNB asks this court to hold that the term “culpable negligence”, at least as used in this case, means the same thing as “gross negligence.”

In response, the Trustee relies on two veiy old Texas cases for the premise that “culpable negligence” and “negligence” have but one and the same meaning. International & G.N.R. Co. v. Hester, 72 Tex. 40, 11 S.W. 1041, 1042 (1888) (equates negligence with “culpable fault”); Wynne v. Simmons Hardware Co., 67 Tex. 40, 1 S.W. 568, 570-71 (1886) (uses the term “culpable negligence” while applying the ordinary care standard). The fact that the Trustee has had to look back at more than 100 years of case law to find only two cases utilizing the term “culpable” in the context of negligence would appear to be some evidence of the reluctance of Texas courts to depart from what is traditionally understood as the ordinary meaning of negligence.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
939 S.W.2d 656, 1996 WL 411217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hoenig-v-texas-commerce-bank-na-texapp-1996.